Today’s economy has us all searching high and low for some extra streams of income, right? The latest stock market volatility and interest rate skyrocketing makes us feel like we are on a daily roller coaster ride that has no end in sight! Looking at owning rental property for extra income might be right up your alley or maybe not?
Own a Property – Earn Money
Owning an income producing property can be a great way to earn extra income in your retirement years! Income producing properties can actually be quite lucrative if you have plenty of patience, determination and resilience.
Being a landlord isn’t for everyone and can be a nightmare or it can be quite rewarding or even both! The best advice I can give you is to first educate yourself with your local landlord tenant laws, carefully purchase income producing properties that make sense moneywise, and last but not least treat any and all tenants with respect.
Being a Landlord Can Have Its Pros and Cons
The pros of owning rental property:
- you get extra rental income,
- depreciation tax benefits
- possible appreciation of the home value over time.
Now the cons:
- you really need to make the numbers work (rents charged vs expenses of owning),
- tenants may not always pay their rent or pay on time (prepare for negotiations, excuses, evictions,
- and last but not least, your income producing property may suffer damage from a tenant’s misuse.
Commercial Properties
What about commercial income producing property for extra income? Easier or more difficult? I’ve actually owned both residential and commercial income producing properties and though they are quite similar, they are also different!
Commercial income producing properties typically require a larger initial investment and have different landlord/tenant laws. They do, however, reward you with a larger return of investment. Like everything in life, being a landlord has its ups and downs and experiences can range from wonderful to bizarre. Below are three true landlord/tenant stories that may help give you a brief look at the ups and downs of being a landlord.
The Case of the Unreachable/Missing Tenant
A punctual tenant paid timely rent for almost two years and then just disappeared with no forwarding address. I received no rental income for over three months and was unable to reach the tenant via phone, mail or email.
My only recourse was to enter the tenant’s unit (per lease I had the right to do so due to abandonment), remove their contents, store them, and re-rent the unit to someone else. Nine months passed by, and the mysterious missing tenant resurfaced. The tenant noted personal life issues and asked for leniency. I ended up accepting a payment for storage fees and bid the tenant a gracious goodbye.
A Tenant Passes Away
A mini-storage tenant in a commercial storage facility I owned unfortunately passed away during his tenancy. The local police department, based on information they had obtained from the tenant’s apartment, contacted me for access to the tenant’s storage unit believing possible explosives had been stored in the unit.
The authorities had to obtain a court order to remove the tenant’s lock as storage unit owners have no access to any tenant’s unit. The police department obtained a warrant to remove the lock, removed the tenant’s lock and found enough explosives to create significant damage to a large area surrounding the storage facility.
The tenant apparently enjoyed collecting various vintage explosives he had purchased from local gun shows (hand grenades, shells, various ammo, etc.). The explosives were removed immediately by local police and nearby military experts.
A month’s rental income was lost, but I was extremely thankful that the explosives were discovered before they could have created a hazardous situation. Lesson learned is to be more informed of what tenants are storing in their rental units. Every tenant typically signs a lease noting no chemicals or explosives will be stored on the property; however, landlords or property managers rarely inspect rental properties for such.
The Perfect Tenants
Decade-long tenants of a condo unit I owned gave notice to terminate their lease due to family caregiver needs. Upon examination of the condo unit, I found the condo’s condition amazingly better than when the tenants took possession 10 years prior.
Walls had been freshly painted, appliances were in good repair, and the condo was move-in ready. Elated, I asked the tenants out to a lovely local restaurant to thank them before returning their full rental deposit given to me 10 years prior.
Hopefully, these stories will give you an idea of some of the ins and outs of owning rental property. Every rental is truly unique. Remember to research properties in your area before purchasing, determine the current demand for rentals, and study the current landlord/tenant laws. With proper due diligence you could be an awesome landlord before you know it!
Let’s Have a Conversation:
Have you thought about being a landlord? Are you looking for safer ways to invest your savings? Have you got some good or bad landlord stories to share?
